The announcement at the Bipartisan Policy Center. On how nafta affects the business. This is about an hour. Good afternoon, everyone. A pleasure to welcome you here to the Bipartisan Policy Center for what i think will be a pretty exciting and important conversation about opportunities to strengthen, modernize and reform the north American Free trade agreement. As i think you are aware, we have two actionpacked conversations. Talkingfirst start out it to of the leaders of the key industry that will be influencing this discussion. We will be joined right around 4 00 by the secretary of commerce. Let me just set the stage for you for a couple of minutes, then we will get into our conversations. Those of you who follow our work know we try to accurately define problems. We have a quaint affinity to evidence and are best efforts to come up with rigorous facts on which people can have a good fight. We like to try to move forward and develop practical and Creative Solutions we think and generate the kind of broadbased support, not just to pass laws, but to pass resilient laws that have the actual investment of the American Public in their success. Finally we advocate. We have ac c4 action. We dont think the world will fall to its knees just based on the genius of our insight. Like the tournament to my left, we get up in there and mix it up. It is not a gentle sport. It requires a real commitment and investment. We are proud to play that role where we can. For the last several months we have been very dis engaged in the discussion around nafta because it is critically important and is far from perfect. Facts you are all generally familiar with, canada and mexico are responsible for one third of our nations exports. 43 of our nations 50 states trade more with canada and mexico than any other countries. Of jobs, some say 14, some say 11, some faith for, millions of u. S. Jobs are part of this north American Value change. At the same time, this is an agreement that obviously needs improvement. It is a 23yearold effort. Bip,s signed in the age before iphones. It did not engage intellectualproperty in a way i think we believe it should. Were going to hear opportunities in the Energy Sector which could not have been contemplated when the agreement was first struck. But more than that this issue is emblematic of one of the core questions that where grappling with as a country what is the future of our nations economy and role in the world . What is the future of American Workers in the Global Economy . I think the idea of the American Dream that so many of us take for granted in this country is not real in the minds of many people who have lost jobs in the last decade. Wages have been flat, cost of college has multiplied by a factor of three. There is a lot of pain and a lot of grievance in that country in this country. A lot of that is channeled into the conversation into trade and inequity, which has become the nafta discussion. We believe this is an issue that is essential, but also essential to bring together the fabric of the country. With that heroic opening, i would like to now turn to two gentlemen who lead industries that are critical to our domestic security and our global power. That of course are our energy and agriculture industries. I want to introduce chip. Who is the chair of the National Corn growers association. Hes the real deal. A thirdgeneration farmer with over 1400 acres of grain production, soy, wheat, barley. His family has been working since the 1700s. Chip is not new to the conversation, he is also not new to politics. He has been working with the usda farm ranch committee. He is vice chair of the u. S. Farmers and ranchers alliance. First easterner to chair the corn grower. Jack gerard, you are probably familiar with. Jack is the ceo of the foundation for the oil and gas industry. State,y of the federal, local and global level. But some people dont fully appreciate that he also serves the industry. The core of the training, certification, best practices. A lot of what happens is below the waterline. It is incredibly important work. Jack is no stranger to these issues. Previously worked with the American Chemical Council of the National Miners association. Two gentlemen who understand the importance of these issues. Let me start with you, chip. You run a farm. Why are you here . Why you care about the north American Free trade agreement . Mr. Bowling i do run a farm. I live and work on a farm everyday. I live about 45 miles south of washington dc where most people dont think there is any farming going on. It is important to me because it has been working. Mexico is the biggest buyer of american corn right now. About 525out buy million bushels every year. They have been easy to deal with, they want our product and right now with the way input and crop prices are, nafta and mexico and canada are the deal for americas corn farmers. Mr. Grumet if the seamlessness of that relationship became higher in transaction costs, what do you think happens . Does mexico just tough it out . What fills that void . Mr. Bowling what happens is we have other countries that grow corn like we do. They dont grow good quality corn like the u. S. Farmer does but brazil and argentina are waiting for mexico to buy corn. Theyre are looking for customers just like we are. We need to work everyday day to protect that market that we have worked for years to build up. I have been to mexico on corn trade missions. They like our product, they like dealing with us, they like the quality. And it makes sense to have corn going from this country into their country on railcars, sometimes interrupts. Ship vessels across the gulf of in trucks. Ship vessels across the gulf of mexico. It is an easy deal for us and them and it makes sense. Mr. Grumet jack, lets turn to energy. Since you took over the helm of api, the Domestic Energy industry has exploded. I think, whether that is cause or coincidence we will leave to the crowd to decide. But the idea of north American Energy selfsufficiency, which was always a talking point 18 years ago. Now actually feels like it is within our grasp. I wonder if you can talk not just about nafta but the importance of the integration of the north American Energy economy and what you see as the potential there. Mr. Gerard thank you for having me. Chip, it is great to meet you and visit as well. A couple points, think you hit it right on the head. A few decades ago if you would of thought or projected that today the United States leads the world in oil and Gas Production and refining, yet just a short few years ago we were building import terminals to import natural gas to benefit the farmers and ranchers and others out there. Really what has happened is remarkable. Therefore, when you put it in the context of nafta and you look at it more holistically across north america, we now have an integrated market that essentially is interdependent on each other. We have situations where we are importing heavier crude oil from canada. We obviously refine it in the United States. Other instances we taken in from mexico, turn into gasoline and send it back to mexico. There is a lot of interdependencies taking place today across the broader north America Energy market. Leading experts believe that by 2020 we could become energy selfsufficient. Selfsufficient as opposed to independent because what we mean by that is we have a capability to produce as much as we consume right here in the north american continent. Nafta, the stability it is brought in terms of our ability to move across borders with full import and export, has been more beneficial. At the end of the day the real beneficiary is the American Consumer because the more you bring the law supply and demand into play, the efficiencies that come with crossborder trade, even the farming and ranching Community Get to experience the lower fuel costs. Aaa estimates the average american saves over 500 a year at the gas pump because of lower gasoline and diesel fuel prices. To us it is very important as we enter into this debate is to recognize the way the markets work, the real value for the u. S. In that broader context of the north American Free trade agreement. Mr. Grumet let me ask you to were not going to forget about canada. The trinational agreement. We tend to focus initially on the question of our relationships with mexico. The mexican approach to energy in terms of foreign investment, openness of market, are fundamentally different today than when nafta was adopted two decades ago. How important an opportunity is that . How much has changed in terms of u. S. Company investments in mexico . What you see as the future there . Mr. Gerard it is still in important stages. Mexico has fundamentally changed their approach to energy just in the past few years. Different than what it was 60, 70 years prior. What we have seen is stability brought to us by nafta and other regulatory regimes is the ability now for us to invest in this broader marketplace. Mexicans being more open to that. If you look at some of the sales , for example, in the gulf of mexico and mexico side, you see very significant investments in from coming in from u. S. Companies. Foreign investment, for in job creation. It benefits us up and down the value chain. The Mexico Energy approach today is very different than it was a few short years ago. Nafta brings us some of the certainty you need and the confidence you can have bringing judicial systems and others that gives certainty to those investment dollars to find a friendly place to land. Mr. Grumet chip, if the environment became less favorable to u. S. Companies, what do you imagine happens with those mexican resources . Mr. Gerard one of the problems , in terms of uncertainty it creates, is capital will go where it is most wanted. When you look at our business, we are a global industry. Were trying to find places where we had the greatest opportunity but also where we are welcome. The situation in mexico in particular, has been in canada for many years, provides great certainty to us now. Anything that would discourage that or create uncertainty would perhaps chill the uncertainty of the economic ability. Mr. Bowling stability. Markets fluctuate every day, every hour on the chicago board of trade. Ever since there has been talk about getting out of nafta, all add commodities have trended down. Even when we decided not to get out of nafta the market trended up. We are in a position now, as agriculture and farmers that we cant afford to drop any more than where they are. If you take u. S. Corn out of the market and the picture, then stability and uncertainty played play a big role. We grow 50 billion bushels of corn every year this country. We export about 2. 5 billion. Trade has been somewhat flat for us over the last several years. Any disruption in trade has a big impact on our farm costs, our financial picture. We have to make sure we dont disrupt that in any way. Mr. Grumet are there other Global Markets you could see shifting american exports to, if the markets were not distracted . Mr. Bowling for us, we would like to go into the asian market. That is where the growing population is. We have some issues. When it comes to biotech in china, we are working on that. Japan,er asian markets, korea, we would love to get more in there. But when you have a Business Partner who lives right across your border and the ease of trade back and forth, thats the best way to go. Mr. Grumet i am sure you agree that no human enterprises perfect. Are there ways that you can imagine the agreement strengthening opportunities for u. S. Export, jobs . Mr. Bowling any agreement can be strengthened. As we mentioned, this is 23 years old. We would want to work with the administration and the usda as far as making the channels of trade clearer and easier. It works very well for us right now. You can always strengthen an agreement. We are open for negotiation. Mr. Grumet jack, same question. I know the fundamentals you have but before a pretty sound, can you see the agreements being improved . Mr. Gerard to be clear, our view comes from the energy standpoint. I cant speak for other sectors to where it might be important for them to strengthen, alter, update, modernize, however you want to characterize the situation. But from our standpoint we believe the best principles are was the free market principles. You protect the environment, you protect the workforce. Then you allow the free flow of goods and commerce. Because ultimately it will find its equilibrium, which then benefits the consumer. I think at the end of the day as we look at north america as a continent, we talk about energy selfsufficiency. Our import, export activity in this country has increased significantly or are the same time we are moving away from other sources of Energy Around the world, thus making us energy selfsufficient. The implications from that are much larger than just the trade question. National security implications, and the list goes on. The geopolitics of Energy Around the globe have changed dramatically. The United States or i should say north america is really becoming the epicenter of energy in the world. Again, something no one would have thought 10 years ago. Mr. Grumet say it little more about interconnectedness. A lot of people imagine trade as you build something and you sell it to someone else. In this linear fashion. But there is a lot of integration between crude mexico going to the u. S. , then going back to mexico and other markets. How entertaining gold is that . Intertangled is that . How different would it be if proverbially the treaty was ripped up . I think suggested in more political forms. What with the industry do in that reality . Mr. Gerard again, uncertainty creates great concern. I would encourage we left this behind somewhere, but we have shown a quick diagram, if you will, of the interdependence of the trade in the north American Community between mexico, the u. S. , canada and the u. S. What you find is that it is not only interconnected today, but those markets are finding their balance in their equilibrium. Refineries, we have in the gulf today that import 135 barrels a day from mexico. For these to be refined in the United States. We turn right around to that same refinery and it has exported over 9 Million Barrels of Refined Products right back to mexico. In many ways, that interconnection is creating 3000 jobs in houston, putting americans to work. What we are doing is taking a mexican crude oil product, bring it to the United States and adding value, turning it right back around to consumers in mexico. We see the same dynamic and relationship with canada and others in terms of natural gas imports and exports. The graph gives you a simple visual to show you the quantity of the movement, both north and south, on both borders. Mr. Grumet lets turn to our polite neighbors to the north. The agriculture connection to canada are as significant as mexico. Talking little bit about obviously, corn and grain to mexico. Whats the dynamic look like with our northern border . Owling we work with canadian corn growers as an organization. We dont send a lot of corn to candidate we send corn byproducts. Sweeteners, ethanol goes into canada. Our livestock friends. They feed corn to the cattle in and they import a lot of our livestock. Its a big part of our trade barrier there. Mr. Grumet in a few minutes i want to ask you about the parlor game of prognostication. Always challenging, probably more so challenging now than ever before, in my experience. Do you think congress should resolve this . Should the administration . Would you think . What you think . Obviously something is going to change with this agreement. Do you have any suggestion for the best process to achieve that . Im looking at you, jack. Mr. Gerard i was waiting for chip to answer that one. President has given a notice to congress in their interaction back and forth, think they both have a role to play. The appropriate level of each at the end of the day, we need to balance that with the broader u. S. Interests. It is hard to predict at this point in time as i think we are in the early stages of a substantive conversation. We have had a lot of conversation of Public Discourse about that is good or bad, etc. , but now it is time to really sit down and back to the point you made about bipartisan, we need to focus on the facts and reality. That is an area where i think energy brings a cooler effect to the broader conversation. The reality is, when you look at that interdependence today, a greatly benefits the United States of america. I think we want to take a breath and think long and hard about how we approach any potential changes, and then clearly understand the implications, not only for business, investment, different industries, but ultimately at the end of the game, the American Public and American Consumer. In many instances they are the ones concerned about these relationships and these agreements. And so we should not lose the Vantage Point of that perspective. Mr. Grumet chip, i know like us you are a big fan of secretary sunny purdue. He was very engaged in these questions. Say what you can about your interactions. Mr. Bowling as we know, the administration will be heavily involved with what happens with nafta. We can hope for, along with the help of mr. Purdue, would be to bring people like me to the table, corn, soybeans, wheat, any agriculture commodity bring us to the table. We